891.24/379: Telegram
The Chargé in Iran (Schnare) to the Secretary of State
[Received February 14—2:35 a.m.]
165. My 445, December 16.84 British Legation has obtained approval of British Treasury to a plan by which gold would be made [Page 567] available for circulation in Iran in hopes of bringing down price of gold and hence of commodities and of counteracting inflation. Plan contemplates importation into Iran of British gold bars to be exchanged for gold coins held by Bank Mellie85 and forming part of cover for rial. Coins would then be placed in circulation leaving Iran’s gold cover unchanged. Iranian press, Majlis and people are protesting violently against the plan alleging that British have ulterior motives harmful to Iran. As result of these protests bill was introduced yesterday in Majlis which would prevent plan being, carried out. British are indignant at this Iranian reaction to what they had intended a helpful gesture.
Millspaugh86 is studying desirability and possible effects on Iranian finance and economy of any such scheme of circulating gold coins or small bars. Meantime, Department is requested to indicate whether American Government would be willing to make gold coins or very small bars available for this purpose. While British have not requested American assistance in this regard it is thought American help might offer solution for political impasse which has arisen. Also British are said to have no coins or small size bars available for use in case Iranians refuse to release coins now in Bank Mellie.